Financial Daily from THE HINDU group of publications
Saturday, Feb 23, 2002
Info-Tech - Overseas Borrowings
US acquisition top priority -- Orient Info defers GDR plan
MUMBAI, Feb. 22
ORIENT Information Technology has delayed its plan for a Global Depository Receipts (GDR) issue. The company, which had initially said that it was planning to list its GDR on the London Stock Exchange by mid-February, now says the listing will take place only after the completion of its acquisition of a US-based company.
``We earlier had plans of listing by mid-February but there has been a delay as we are looking for the right time to enter the market. Besides, we are keen on completing our acquisition of a large US-based company before going ahead with GDR issue. Hence, the acquisition will come first and immediately after that, we will announce our GDR plans,'' Mr Ketan Sheth, Chairman and Managing Director, told Business Line.
The Orient Info stock had increased from Rs 50 in mid-November to Rs 90 by mid-December 2001 on the bourses, riding the anticipation of the acquisition and GDR issue. However, after this brief appreciation, the stock witnessed some correction. It closed the day at Rs 72.85 at the BSE, and has posted a return of over 14 per cent since Februry 1.
Mr Sheth said that the documentation and roadmap for the GDR are already under way and, the company has also shortlisted merchant bankers.
``During the EGM held on January 4, we got the requisite shareholder approval for both the acquisition and GDR with an investment limit of around Rs 250 crore. Once the merchant banker is appointed, it would take another three months for the listing to be completed.''
As for the acquisition, the company is talking to three US software companies but is particularly keen on one of them, which has a strong presence in the financial and retail verticals.
Mr Sheth had earlier said that the acquisition would primarily be a stock deal with a token amount of $2-4 million in cash.
``However, given the market situation, the consideration will be more cash oriented because we feel that with cash we can get a cheaper valuation. But, the board will still consider both options and decide next week which one to go with.''
Meanwhile, one plan that seems to be on track is Orient's joint venture with a Saudi Arabian company, belonging to the Royal Family, which operates in the enterprise solution space.
``We will formally start operations in the Middle East on March 11. In the first year of operation, we expect more than $5 million worth of business from this joint venture alone,'' Mr Sheth said.
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